Hammerson plans for Highcross reflect shrinking retail sector
A major signal of what’s likely to happen more widely in UK retail in the next few years came on Wednesday as property giant Hammerson announced a major build-to-rent scheme for Leicester City Centre. It will see “part of the former Debenhams department store at Highcross, transformed into new high-quality homes for local people”.
Some of the biggest retail stores in the UK have closed down in recent years, from the collapse of BHS in 2016, to House of Fraser closures and the current problems with Debenhams.
And while parts of some Debenhams stores have recently been converted into Next Beauty & Home locations, it's very difficult to rent out such large spaces in the tough retail environment of today. There are limited numbers of tenants seeking such spaces. John Lewis is also shrinking and while Primark, Zara, JD Sports and H&M are still expanding, they often already have flagship space is the areas where department stores are closing.
It means more and more large retail spaces are likely to be converted to other uses.
But at least Hammerson said that the retail frontage onto the mall at Highcross will be retained and will be “transformed into smaller and more flexible space for retail and leisure brands”. Even here though, the company seems to be acknowledging that it won't be able to rent the square footage fully to retail tenants, with leisure also included.
The proposal supports Hammerson’s strategy to “reduce the amount of floor space occupied by challenged retail categories at its flagship destinations, particularly that occupied by department stores”.
But some of the vacated department store spaces are still being used for retail. In 2019 a major reconfiguration of the former House of Fraser outlet unit at Highcross was completed allowing new brands to take space in target categories, including Zara and JD Sports, as well as leisure brand Treetop Adventure Golf.
Mark Bourgeois, Managing Director UK and Ireland at Hammerson said: “Today’s announcement is another example of the steps we are taking to manage the structural shift in retail whilst maintaining the vibrancy at our flagship destinations through a diversified offer and mix of uses. This exciting project will meet demand for rented accommodation in Leicester city centre and ensure Highcross remains an exciting destination for visitors, whilst supporting local businesses and boosting footfall.”
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